February 2000 Volume 81 Number 2 "serving the protectors"
Police Credit Union

Budgeting more efficiently -
plan to have money available next Christmas!

any people start off the new year with a heavy burden of debt accrued in the December/January period. For some, it can take many months before they are back on their financial feet. Budgeting can help you to get the most out of the Christmas-New Year and holiday seasons without financial strain.

Budgeting does not have to mean going without the things you want or taking all spontaneity out of your spending patterns. Budgeting is establishing a sensible plan to achieve goals and to free up more to spend on yourself and your family. It’s an aid to enjoying life to its fullest.

The ultimate aim of budgeting is to ensure that you can meet all your financial commitments and have some left over to save. As a general rule we suggest you aim to save 10% of your gross annual income. This breaks down to 5% for short term aims and 5% for longer term goals. People with young families should aim to build up an emergency fund equal to three months take-home pay, in case of emergencies or retrenchment.

Give yourself an incentive to budget. You could endeavour to save enough in the first three months of your new budget to buy something that will improve your lifestyle, such as new clothes, a dishwasher or VCR. This will help convince you that budgeting works.

A simple method of budgeting is to divide up all your expenses into categories and include your savings goals as part of this. Allocate expenses under the headings of:

• Basic expenditure (house repayments, utilities, travel, food, education/occupation and health).
• Lifestyle expenditure (clothing, entertainment, personal items, holidays and sports).
• Savings (general, special purpose and emergency).
• Payments (car, credit card, personal loan and others).

Add the expenditure totals and subtract this amount from your household income total. If your expenditure exceeds your income reduce the amount you have allocated for Savings and Lifestyle expenditure as appropriate.

The most important thing to remember is that there is no secret to financial success - it only takes a bit of careful thought and planning.

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